VANGUARD EXTENDED MARKET INDEX
The production or consumption conditions of the goods constrain the economy of the relevant sectors. However, observations made in various sectors show that the location variable is not decisive.
For a particular good or service, radically different industrial organizations and business models can be introduced with the support of technologies in the same sequence.
In the case of the later developed apparel industries, new information technologies contribute to two simultaneous movements:
- On the one hand, it facilitates relocation movements by allowing complex and rapid changes with remote contractors.
- On the other hand, they weaken relevance and relevance by strengthening the effectiveness, responsiveness and capacity of local firms to mobilize fragmented skills.
In this case, communication technologies make it possible to separate certain business functions (cutting, production) or certain decision-making nodes (replenishment). It does not change the transport logistics circuits, which remain unchanged due to the materiality of the goods.
The only way to shorten the physical circuit of materials and products is to concentrate it geographically.
In the United States, textile-apparel companies therefore contribute to lowering production costs.
Distant countries with low labor costs preferred to adopt supply-centered organizational methods rather than systematically pursuing relocation.
However, this has weakened firms' responsiveness in an industry strongly marked by volatility and fluctuating demand.
In other sectors, for example, in the press or in the sectors of large network companies, the pursuit of quality of service and proximity to the customer leads to decentralization and autonomy.
This development of the autonomy of local production centers provides better local cohesion. However, unless intensive central coordination procedures are developed, it hinders overall flexibility and agility.
These developments seem contradictory. Because they reflect the coexistence of several influences and various response strategies.
In some cases, industry sectors respond to the introduction of new information and communication technologies with fragmentation strategies.
The specialization of the sites, the removal of the centers of expertise, the distribution of tasks and the location of the partners are very important. In other cases, it is transformed by the integration of different stages of value-added creation.
In relations with consumers, ICTs are also mobilized to support different forms of collaboration and localization. In the first case, the company centralizes production and commercial activity while serving geographically dispersed consumers thanks to its logistical mastery.
In a second case, supply and production remain local and the company tries more to coordinate this piecemeal supply.
To produce and market the same good, therefore, essentially two opposite movements are at work:
- The first is the development of markets on a comprehensive national and international basis. This globalization fosters economies of scale and scope. It supports the concentration of knowledge, the unification of markets and the standardization of products. (technical, informational, financial or commercial integration).
- The second movement is manifested by the emergence of local networks of industrial, technical or commercial order, which form the essential components of the federative communication and information structures in which structures or communities are organized.
At the industrial level, the network then appears as a means of pooling specialized resources in a dispersed framework.
Firms organize themselves on the basis of relatively independent subsets (profit centers, franchises) defined by geographic location or activity.
In this case, the recognition of specific local expertise, as well as the search for optimization of resources and tools, leads to the promotion of exchanges.
Centralization or Collaboration
ICTs appear as flexible tools that companies act differently according to their strategies and activities. The alternative highlighted above finds expression in forms of competition with similar structures in several sectors.
In the first case, ICT reinforces the traditional physical distribution model based on the management of large volumes of purchases and inventories and the storage of products by the distributor. This inventory-based management is capital expensive, but gives its strength to distribution.
It provides significant margins, thanks to the economies of scale in supply as well as large amounts of bargaining opportunities. It also reduces the risks of stock shortages and delays. It enables stock management in flows by transferring financing costs to producers.
However, a second configuration may exist for the same product groups. Smaller-sized distributors or those who want to rely more on their supplier networks register orders before forwarding them to suppliers. They prefer to be content with an intermediary function, the products remain with the suppliers.
This position exposes the distributor to the risks of stock shortages over which he has no control, as the quality of stock management is that of the supplier.
This challenge arises when e-commerce sites offer a wide range of products. They must create a comprehensive, multi-criteria database of product data for each referenced manufacturer.
Dr.Yaşam Ayavefe
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